Altus Group Limited

Thank you for standing by. This is the conference operator. Welcome to the Altus Group third quarter 2022 financial results conference call and webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Camilla Bartasiewicz. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Altus Group's third quarter results conference call and webcast for the period ended September 30th, 2022. The news release announcing our results was issued after market closed this afternoon. and it's posted on our website and on our CETO profile, along with our interim MD&A and financial statements. For those of you joining us online, we're pleased to introduce slides to accompany our prepared remarks. The slide deck is also available on our website for those participating by phone. Joining us today are CEO Jim Hannon, CFO Angelo Bartolini, as well as our Vice President of Finance and Accounting, Eric Lau. We'll start with some prepared remarks, and then we'll move right into the Q&A session. If we miss any questions, please contact me directly by email. Angela will begin by covering off her financial performance, and then Jim will provide an operational update. Please be advised that some of our remarks on this call may contain forward-looking information. Forward-looking information is based on assumptions and therefore subject to risks and uncertainties that could cause actual results to differ materially from those projected. You can read about these assumptions, risks, and uncertainties in today's press release and on our most recently filed MD&A and annual information form, as well as in our other filings with the Canadian securities regulators. We undertake no obligation to update forward-looking information except as required by law. Also, please be reminded that Altus Group uses CERN non-GAAP and other measures as indicators of our financial and operational performance. An explanation of these measures are detailed in today's IR materials, including the news release, slides, MD&A, and in our other filings with the Canadian securities regulators.

Okay, over to you, Andrew. Thanks, Camilla. Before I begin, please note that all the figures we'll be referring to today are as reported, and our growth rates will be on a constant currency basis. We delivered another quarter of very strong results with clear evidence of our execution across numerous key metrics. Our double-digit consolidated revenue and adjusted EBITDA growth reflects continued momentum in analytics and robust CRE consulting performance. Analytics is firing on all cylinders. High growth in recurring revenue, solid bookings performance, and adjusted EBITDA margin expansion. Our continued execution is driving high sales productivity. cost optimization, and enhanced operating leverage, demonstrating that we can grow and expand margins. This results in increased cash flow from operations, up nearly 19 million year-over-year in the quarter. In addition to delivering solid financial results, we're making progress against our strategic initiatives, and we are seeing the returns from our investments. We have momentum across all our businesses as we invest in technology and strategic growth initiatives. I couldn't be more pleased to host my final earnings call at Altus, delivering such an outstanding quarter. Diving into our consolidated performance, we had strength across all of our key metrics. Revenues were up 18%, of which 13% of the growth was organic. This is the sixth consecutive quarter of double-digit top-line growth. Profit under IFRS was $6.8 million, up meaningfully from a loss in the prior year. Adjusted EPS was up 34 percent, reflecting the earnings growth from analytics. Consolidated margins were up 240 basis points to 18.5 percent, driven by a 590 basis point increase from analytics. And adjusted EPS came in at 42 cents, a nice increase, particularly given the larger share count followed following the equity financing last year. Through focus, simplification, and execution, we are improving our business performance while positioning Altus strategically for the future. This requires us to realign our operations and our resources towards our growth priorities. In Q3, we took additional costs out as part of our restructuring program, recording an $8 million restructuring charge. More than half related to our ongoing efforts to rationalize our office, our office leases space in certain markets and the remainder related to employee charges. The year-to-date restructuring program charge stands at $21.9 million. Turning to our business segment performance, starting with analytics, analytics revenue is up 35 percent, and notably, overtime revenue was up 40 percent. We're sustaining the accelerated growth and starting to put out notable margin expansion. This speaks to our sales execution bolstered by the operational improvements we've been driving, healthy demand for our solutions, and our focus on enhancing operating leverage. As well, we are starting to see the results of our transition to a recurring revenue model implemented just over two years ago, which provides for greater revenue growth and margin expansion. I'm really pleased with the 25% organic revenue growth. and especially the 28 percent organic overtime revenue growth in U-High. On the earnings side, adjusted EBITDA was up 76 percent. This reflects higher revenues, improved operating efficiencies, ongoing cost optimization, and a net-back tailwind on an as-reported basis from a stronger U.S. dollar. Slide 9 illustrates the impact of these low factors. which show about 590 basis point increase in our adjusted EBITDA margins to nearly 24 percent in Q3. Given our strong overtime revenue base and low churn, this bodes well for margin expansion in future. Overtime revenue growth is an important KPI for us. We're growing this revenue stream and continue to make investments that will further improve this metric. We enjoy healthy demand for our key offers while benefiting from customer expansion as well as new customer additions. A high percentage of our revenue growth continues to come from our existing customer base, where we have a significant runway for large share expansion. And we continue to add new customers to our roster, both in North America and internationally. In Q3, we added approximately 200 new logos for artists. This is in addition to new logos from our other solutions. We're also seeing revenue growth internationally in our core geographies. While the majority of our growth continues to come from North America, we also posted notable growth in EMEA and APAC. Our bookings at 26.9 million showed a solid increase of 28% over last year, while increasing 8% sequentially, indicating continued strong demand for our offers despite the macro challenges. Most noteworthy, recurring bookings were up 55% year over year, As a reminder, the effectiveness of our go-to-market model began to emerge in the fourth quarter last year. While our productivity continues to grow, our year-over-year percentage growth in the future will now be off this benchmark. Turning to the CRA consulting segment, property tax had modest revenue growth, consistent with our expectations. Both the U.S. and Canadian operations had double-digit growth offset by a decline in the U.K. An unfavorable FX rate continues to challenge the U.K. business. And as discussed on the last earnings call, the U.K. continues to be impacted by the slowed cadence of settlement volumes at the valuation office due to resource constraints. Though impacting revenues in this quarter, it translates to a higher backlog entering 2023. Our valuation and cost advisory businesses performed well in the quarter. This reflects continued healthy market demand and effective sale and execution. The growth rate also takes into account a lower compare in the same quarter last year, which experienced disruption from the cybersecurity incident. And finally, our balance sheet and our net cash from operating activities continue to be strong. We finished the quarter with a cash position of $46.6 million, and with $324 million in debt debt. The funded debt to adjusted EBITDA leverage ratio, as defined in our credit agreement, was 2.29 times, a nice improvement from last quarter and well below our maximum limit of 4.5 times. Applying our cash, the net debt to adjusted EBITDA leverage ratio was 2.2 times. Given our growing adjusted EBITDA levels and our ability to generate strong cash flows, we are able to deleverage quickly and reapply our available capital towards growth initiatives. With that, I'll now turn it over to Jim to take us through some of the operational progress.